Binani Cement creditors may be saved haircut as 5 bids emerge
16 January 2018
The ailing Binani Cement owned by Braj Binani has received five bids from leading cement companies and one joint bid from ace stock market investor Rakesh Jhnunjhunwala and Ramesh Damani of D-Mart.
The cement companies bidding for Binani are Aditya Birla-owned UltraTech, JSW, Ramco Cements, Heidelberg Cement India and Dalmia Bharat Cements.
Billionaires Jhunjhunwala and Damani teamed up to bid for the Rajasthan-based company, which is facing bankruptcy proceedings from its lenders.
Dalmia Bharat partnered billionaire Ajay Piramal to bid for Binani Cement, while the JSW Group submitted its proposal jointly with a private equity firm and Ramco Cement tied up with private equity fund True North.
The bids will be opened in front of the committee of creditors (COC) today.
The company owes banks about of Rs4,000 crore. The total money the company owes to lenders, including unsecured creditors, is about Rs7,000 crore.
Edelweiss Asset Reconstruction Co, which owns 70 per cent of the debt, is the lead financial creditor and the remaining debt is held by State Bank of India (SBI), Bank of Baroda, Bank of India and IDBI Bank.
Lenders had made a claim of Rs 3,884 crore on the company. This includes loans acquired by Edelweiss Asset Reconstruction Company from banks and dues to State Bank of India, Canara Bank and Bank of Baroda.
This apart, the company also faces claims of Rs 2,429 crore from IDBI Bank and SBI in the form of corporate guarantees
Binani Cement has a global manufacturing capacity of 11.25 million tonne per annum with an integrated plant in India and China and grinding units in Dubai. It has two manufacturing facilities outside India - one in China (Shandong Binani Rongan Cement) and another one in Dubai (Binani Cement factory).
"The partnership between Jhunjhunwala and Damani is a big surprise," an unnamed source told The Economic Times. "If you look at the list of bidders, it appears that competition will only intensify and lenders may not have to take any haircut."
A banking source cited by DNA agreed, "Bankers hope to recover more than 100 per cent of the debt with such big groups bidding for the company." The company had got expression of interest from nearly 22 bidders.
Binani Cement's plants in Rajasthan have a capacity of 6.25 million tonne a year. "The purchase of the Rajasthan unit can cater to the entire northern and western markets for the domestic bidders, according to DNA's sources.
In July, the Kolkata bench of the National Company Law Tribunal (NCLT) had admitted an insolvency petition against Binani Cement by Bank of Baroda (BoB) after the company failed to repay a sum of Rs97 crore.
The company's cement units were reportedly running in perfect condition, but got into financial difficulties after the Rajasthan government asked the company to pay value-added tax arrears of Rs181 crore for 2008-11 at one go and diversification related issues.
Braj Binani has been instrumental in the diversification initiative of the Binani Group into cement, glass fibre, engineering, procurement & construction (EPC) and ready mix concrete products.
The company also diversified into fibre glass manufacturing by setting up a unit in United Kingdom, which resulted in the company balance-sheet getting stretched. It reported a net loss of Rs289 crore in 2015-16 on Rs1,524 crore in revenues, primarily owing to an interest outgo of Rs368 crore.
Binani Industries had established a glass fibre business with four manufacturing centres in Europe, India and USA, all of which are wholly owned subsidiaries of Binani Industries.
Then it set up the Binani Infratech Ltd as EPC services company providing infrastructure development services. It also diversified into power setting up Binani Energy which focused on both renewable and non-renewable power.